from Persistent to Consistent

Searching for the silver lining

This post is somewhat unusual in that it actually contains a chart – whump! (sound of reader falling off chair) and describes a failed trade. That last bit isn’t (currently) so unusual 😉

The silver lining is related to the ‘recovery’ or indeed what’s known as the art of getting out… but before we go there I’ll cover why I thought getting in was a good idea…

Essentially I ‘felt’ that we’d got to the bottom for the euro ahead of the US open and that we should see the cavalry appear to buy back the lows. I didn’t believe there would be a whole heap more selling interest last thing on a Friday…

This was sort of propped up by the super amount of chatter along the lines of ‘OMFG the Euro is going to TANK!!’ which generally gets on my nerves…

It probably didn’t help that I was looking at this on my phone while sitting in a coffee shop. This is never a good idea. At the time I also believed that there would be a short sell off then a recovery – which meant I at least placed my initial stop a thousand light years from my entry.

Now in retrospect what I failed to check when attempting to pull this sort of stunt was the ATR for previous days. We’d moved about 100 points and the previous few daily ATR’s was about 120 so at the very least I was getting in significantly early…

So I got filled at 1.21790 and had to leave what I was doing, move about and get back to work… The next point I have an opportunity to see what’s going on I have one of these moments…

Anyway I’m now pretty much looking to get out of this because the original ‘thesis’ for my trade is very wrong. The only saving grace here is that what I originally believed would happen will still happen it’s just this is going to take me out at/around me entry point rather than at +30 which is what I had originally been looking for

So I’m now ‘happy’ cause while I made a rookie mistake (not checking what the ATR actually was before going into this) I’ve enough experience to ‘know’ that rather than throwing all my toys out of the pram and puke for -20 price should grind back to at/near my entry and I can get out pretty close to even.

There’s a point later where I could have got out exactly flat but I wanted to exit before people started fading the london close and didn’t want to grind out another hour with a potential 30 point loss ‘at risk’ if the market decided to take another leg down. What’s the benefit of risking losing 30 to gain another 5 points on my exit? There isn’t one and I obviously can’t see into the future. If anything this post proves that. LOL

Now there’s all sorts of things I could have done to improve the outcome like adding at 1.2150 but I’m trying to manage this through my phone and generally stick to my (new and on the fly) exit strategy. Adding to losers isn’t on the list of ‘new and wacky things to try‘ especially not on a Friday afternoon when I’ve not done it before.

Or I could have had a stop under 1.2175 but I wasn’t really prepared to do that ’cause I was a little close to the US open bell.

Or I could have closed my trade then got short at 1.21800 but really, by this time I was a bit fried mentally. Worth considering for another time though… Maybe not last thing on a Friday however.

So there you go. I made a mistake, it didn’t kill me, I learned a lot and maybe some of you learned something too (e.g. time of day is important)

While it was a ‘failure’ from a results perspective from an ’emotional management’ perspective there was a marked improvement from previous encounters like this.

p.s. Thanks to everyone for the ridiculous number of views (2000+) related to the previous post which was completely staggering. Your support and interest is essentially what is currently keeping me moving forwards – seriously.

I’m also considering changing the theme/format of this blog but if I go there it’ll be in a couple of weeks time. People don’t seem to like change so I’ll only do this if/when I can find something really sweet/zen looking etc.

I’m not going to call you names but what I will do is ask you what the hell are you doing putting on trades in a coffee shop? I’m pretty sure I read some way back you writing something about wanting to trade as a business?

You mention in your post towards the bottom that you made 1 mistake? This trade above just about touches every one of the do not do’s there is.

I mean first of all:
1) putting on trades in a coffee shop – are you a trader or a punter?
2) thinking about doubling down into a loser against the major trend?
3) trading against the trend without any real show of strength, other than that it’s gone down enough? (it has never gone to low or to high).
4) your stop placement? where on earth is that? I can almost forgive this trade because it’s somewhat imaginative and I don’t see any of that waiting for pin bar or whatever type candle nonsense but then you back it up with a god awful stop. I mean if the idea is that you are not going to see any more selling, then if there is more selling you are wrong – you get out – a stop is supposed to be the point at which you know you are wrong.
5) If you really believed the point at which you knew you were wrong was 1239 then why on earth are you getting back out of your trade once it has started moving in your favour? I mean you’ve taken all the heat, the potential of a full loss and as soon as it starts going your way, you cut it off at the knees…
6) Talking about the psychological stuff for a moment – in this trade sure you have escaped with a small loss but at what cost to your emotional capital? This kind of thing really empties the mug, whether you realise it now or in the next few days of trading. I think by your own words “by this time I was a bit fried mentally”, you know pretty much what I’m talking about here.
7) Lastly I get no impression what so ever that there was any real plan behind this, other than it’s gone to low. One minute you are long and taking a fair amount of heat, then the market starts to move with you and you close out and are thinking about going short against the up move? Do you like being on the wrong side of the market?

I could continue but I think you see where I’m coming from.. in my opinion all of this stems from you putting on a trade in a coffee shop.

So all that being said, I hope you don’t take this rant personally because it is in no way a personal attack just a serious kick up the arse. I know your big into personal psychology so I think you will see this post for what it is, I hope you would give me the same criticism should the tables be turned.

I can actually feel the pain you went through on this trade just looking at it. Really think you can do much better though.

Hi 1Lot – I appreciate you taking the time to write this which I’m awarding the ‘best comment’ prize superseding Simon – the previous title holder – here [and he was right on the money there too]

On a serious note however I’m old enough to know that people who really give a shit are prepared to step up and tell someone how it is rather than sugar coating it or letting it slide. So yep, consider the kick successfully administered and no personal offence taken on my part. When you’re right you’re right and that’s all there is to it so I’m not going to try to comment on any of your points there. Anything I attempt to say would only compound my embarrassment… I have to agree my stop placement was spectacularly off on this one.

You are also right on the last point (thankfully) in that I can do much better.

Having overcome a number of psychological challenges in the last few months I’m expecting to turn things around in pretty short order

Part of the reason for writing this blog was to get some accountability going since trading is pretty solitary.

Looks like a shitty trade to me Robert…
Fractal 85 to 00, then you even entered when price started trading below. I can see there is a level at around 78, a point of release from earlier in the week and some inefficiency, but a fractal right above that kind of support, forming below the figure is not looking good for your long buddy. Your stop should have been where you would have been wrong on the trade, and thats under 75 where I see a potential level (which sucks anyway given the price action into it.)

If you didnt see this stuff or just didnt react to it, you have gotten a bit lost on your way. Have you been following PTC and reviewing material from the workshop? Hope you can post some quality trades with merit and at least 3 supporting facts for your entry; not ‘just because’ the market is due to pullback or fade for whatever reason. you need to drop thoes types of assumptions like a bad habit.

It is my observation that fridays are often one sided and bleedy – not something to trade into. if you dont get the entry early, you will struggle to fade your levels the rest of the day trying to catch that knife. but again, this is a generalization and assumption. However it is based on my personal understanding of price and spidey sense.

Share and show off some stuff that works! I am focusing mostly on breaking points, and point of origin/release for my trades. Anyways, if you haven’t already… you can stop feeling bad, build a bridge and get over it!

A set of rules and a trading plan might be wise – when we trade we are trading our beliefs about the markets – I’ve yet to meet anyone that’s 100% right on every single trade – being right 100% of the time just does not exist – therefore if we go long we believe the markets going up – doing this on gut feeling is not having a plan.

After everyone’s great comments and feedback I’ve got a very distinct idea of what I need to do in order to ‘close the gap’ on my trading towards a better level of consistency. Guess what? My weekend is going to consist of looking at a shed load of charts 😉

Tradings a bit like the olympics (wait for a glut of tading/olympic based posts to be published! – I’ll be after my royalties if I find any) – many try but few succeed, bit like the SAS, Royal Marines et al. If you think about it, they [olympians] spend years training and learning their craft, they know exactly what they have to do to get a medal – only they will know if they’re really fit enough to obtain a medal and when the pressures on some of them crack – you can link this to trading because when money is at risk we have to make sure our trading plan works and can stand the pressure – how many olympians would not bother training and learning their event?, how many would just turn up on the day and try and win a gold – occasionally someone would get lucky but most would fail.
Funny that this industry has a 90-95% failure rate!

This reminds me of when the SAS stormed the Iranian embassy in the 1980’s – the week following hundred’s of ordinary people turned up at the gates of Stirling Lines and asked to join, the PT staff then started them out on the fitness tests – of which they all failed! just like trading they obviously thought all you have to do is turn up, press a few buttons, decide which way the markets heading and you’ll get in.

Have you looked at risk, risk management and position sizing? Crucial areas along with the expectancy of your trading system – from this you can work out how much you’ll make from your system per trade over the long run – It is perfectly possible to suffer 5-10 losing trades in a row – this is just the random distribution of probabilities that exist – again people don’t bother with this, bin a perfectly good set-up that they happened to trade during a bad spell.

IMO understanding risk, probabilities and position sizing is the Holy grail of trading – not a hot indicator or set-up

Thanks for the comments. Happily I finally overcame ‘indicator-itis’ last year but it’s taken me a long while to ‘get my eye in’ regards price action and basically spend enough time looking at charts to even begin to figure out what might work for me/my personality.

Then you’ve got to test/trust what you’re looking at and finally ACT on an idea. We certainly are on the road less travelled at this point and I’m only just, just beginning to look at trading from the perspective of probabilities rather than yes/no/black/white. I will re-run some stuff and write up a post on this soon.

I’m just old enough to ‘remember’ the embassy siege but wasn’t aware of the follow-on with people turning up to join so thanks for that piece of info. On this basis alone I created the ‘Thinking of trading? Read this first‘ page on the blog because it’s clear even 90-95% may be understating the failure rate. If your baseline is quite broad I’d reckon the actual success rate is much smaller.

Compared to some participants my risk and position sizing approach is very primitive indeed. At the moment that aspect of what I’m doing is very much behind the curve as I’m currently wrestling with some of the more ‘psychological’ aspects of this endeavour. Again – more to follow on this at some point when it’s not 00:18 🙂

Thanks as ever for the pointers, encouragement and interest – All this stuff helps me think in the right direction which can only be a good thing